LAUNCESTON, Australia, Jan 10 (Reuters) - The emerging dynamic for crude oil markets this year is the struggle between OPEC and its allies for higher prices against the vocal push for low prices from U.S. President Donald Trump.

Much has already been written on which side is likely to prevail, but in the meantime the losers are refiners in Asia, who face crude prices likely to be higher relative to those in Europe and the Americas.

This is likely because Asian refiners will bear the brunt of lower supplies from OPEC's Middle East producers, as well as Russia, while at the same time being unable to take full advantage of cheaper U.S. shale crude oil.

While more U.S. crude is expected to flow to Asia in coming months because of the discount of West Texas Intermediate to the global light crude benchmark Brent, it remains questionable as to whether this will offset lower supplies from the Middle East.

Differences in crude quality also aren't working in favour of Asian refiners, given the preference of many for heavier, sour crudes such as those typically supplied by top Middle East exporters such as Saudi Arabia, Iraq and Iran.

While there may be more U.S. crude available at competitive prices in Asia, there may not be the appetite for it among many refiners given their plants are optimised to run on heavier grades.

And those heavier grades are looking more expensive as demand for them rises and OPEC and its allies cut output.

OPEC oil production slumped by the most in almost two years in December, with the reduction coming ahead of a formal agreement between the 15-member producer organisation and its allies, including Russia.

OPEC pumped 32.68 million barrels per day (bpd) last month, according to a Reuters survey published on Jan. 3, down 460,000 bpd from November and the largest month-on-month drop since January 2017.

OPEC, Russia and other non-members, an alliance known as OPEC+, agreed in December to reduce supply by 1.2 million bpd in 2019 from November 2018 levels starting this month. OPEC's share of that cut is 800,000 bpd.

The OPEC+ cuts are making Middle East heavier crudes lose their price advantage to lighter grades.

Dubai Mercantile Exchange (DME) futures for Oman crude for March settlement ended at $60.57 a barrel on Wednesday, while the similar Brent contract was at $61.83, a discount of just $1.26.

Six months ago Brent was at $79.44 a barrel while DME Oman was at $75.32, a significantly deeper $4.12 discount.

ASIA EXPOSED

The erosion of Oman's price advantage to Brent leaves many Asian refiners with little choice but to pay relatively more for their crude supplies.

Even if they can switch to using lighter crude grades, they end up producing more gasoline than desired and not enough middle distillates, such as diesel and jet kerosene.

While the profit margin, or crack, for a Singapore refinery producing diesel from Dubai crude is off its November peak of $17.97 a barrel, at the close of $13.43 on Wednesday it is still comfortably above the profit on gasoline.

Producing a barrel of gasoline from Brent crude in Singapore &lt;GL92-SIN-CRK> actually yielded a loss of 37 cents a barrel on Wednesday, down from the peak last year of a profit of $11.55, reached on Aug. 15.

The contrasting fortunes of gasoline and middle distillates in Asia is a reflection of the struggles Asian refiners are having in adapting to the conflicting aims of the governments of the major oil producers, namely the United States, Russia and Saudi Arabia.

Throw in uncertainty over what happens in April when U.S. waivers over Iran's crude exports end, and the picture clouds further for Asian refiners, who buy about two-thirds of the oil exported from the Middle East.

It's not a situation of their making, but Asia's refiners are caught between the OPEC+ moves to boost oil prices, and Trump's Twitter onslaught aimed at keeping them low.

And the geopolitics of Trump's renewed sanctions against Iran over its nuclear programme, the war in Syria and the ongoing fallout from the killing by Saudi agents of journalist Jamal Khashoggi in Turkey add to the brew of uncertainty. (Editing by Christian Schmollinger)